The Impact of Activision Blizzard

Key Points and Further Developments

Since the
announcement there have been several developments, some related directly to
Activision or Vivendi pre-merger finalization and some with the prospective
Activision Blizzard:

"Activision Blizzard" won't be
used as a brand

Actiblizzard,
Blizzavision -- we've all had fun coming up with daft names for the new company,
but Activision Blizzard, though it's likely to stay the company's name on the
stock market (as "Blizzard" gives it some star power) isn't expected
to be the "consumer facing" brand for any titles from the future
company. So, for example, World of
Warcraft titles will still only say "Blizzard" on the box, as CEO
Mike Morhaime told 1UP shortly after the merger was made public.

Activision were #1 publisher in the fourth
quarter 2007

According to
NPD data, Activision were the #1 publisher for console, handheld, and PC games
in the United States, based on sales, and they saw a 92 percent surge in annual
revenue, with success related to Neversoft's Guitar Hero III: Legends of Rock and Infinity Ward's Call of Duty 4: Modern Warfare (according
to various tracking firms respectively the #1 and #2 best-selling titles in the
United States and Europe during fiscal year 2008).

As part of
the announcement, Activision noted upcoming titles would include Guitar Hero IV, Call of Duty 5, James Bond,
new Tony Hawks, Dreamworks, and
Marvel titles, plus an "entry into racing with Bizarre [Creations]."
Vivendi titles, other than the key World
of Warcraft franchise, have not been as visible.

Vivendi Games saw sales fall 24% due to a
wait for the next WoW expansion

Vivendi's
first quarter 2008 results showed a 24 drop over the previous year (which saw
the release of The Burning Crusade) but Blizzard still performed strongly -
with sales of €192 million ($296.6 million) and the addition of two million
more subscribers, taking it to 10.7 million. This further
affirms Vivendi's reliance on Blizzard.

Activision have been sued by a group of
investors over the merger

The Wayne
County Employees' Retirement System has filed a complaint in Delaware Chancery
Court, in Wilmington claiming that
Vivendi's 52 percent ownership of the combined Activision Blizzard company
disadvantages Activision shareholders.

It is currently unknown if this has
caused any delay in the merger, and although Activision is expected to be the "dominant partner" with CEO Bobby Kotick
transferring to the main seat of power at Activision Blizzard, it's unlikely to
relate to the issue of shareholders being disadvantaged.

Sierra Games have to be pitched to
Activision?

One of
Vivendi's labels, Sierra, now has to 'essentially' pitch all of its upcoming titles to
Activision executives, according to an article from Variety. This report was backed up off the record by developers in conversation with Gamasutra,
which further implies that Activision is the dominant partner.

Bobby Kotick sure likes to talk

Activision's
CEO and soon-to-be Activision Blizzard CEO has talked a lot about the future of
Activision and Activision Blizzard, fuelling speculation and discussion of the
company to fever pitch. His often headline grabbing statements include:

Claiming
the merger was entirely about getting their hands on Blizzard: "The merger
was really our mechanism to get access to Blizzard's talent, Blizzard's
capability, their infrastructure, from the multiplayer matchup standpoint, from
a multiplayer gaming standpoint, but also in areas we would never have had an
opportunity to participate."

Suggestions that they may explore additional monetization methods for WoW: "The business has grown so
much... that [Blizzard], like us, have tried to prioritize opportunity, and
that probably has been at the expense of expanding [average revenue per user]
to the few million hardcore, rabid hobbyist enthusiast World of Warcraft
fans who would pay substantially more than probably what they're paying today
for enhanced services like character transfers."

Using
Blizzard to push Activision franchises in Asia:
"There was 'no greater resource' than Blizzard to help the company push
franchises like Guitar Hero into
Asian markets."

A possible
Call of Duty MMO: "Speaking at the Morgan Stanley Technology Conference in
California, Activision CEO Bobby
Kotick has raised the possibility of a massively multiplayer online (MMO) Call
Of Duty game"...

But also
claiming that MMOs could be an "insurmountable product category": "We
don't think that even if we made the USD 500 million or billion-dollar
investment to get a product out [to compete with WoW] that we would even be successful doing it."